Investor Tips for Avoiding Unregistered Entities
June 14, 2022
The investment world is full of fraudsters, crooks, and scam artists, and investors must always remain vigilant to keep their investments safe. One pitfall that investors must avoid is the sale of securities by unregistered firms or advisors. In the United States, anyone who solicits investors to purchase securities must register with the Securities and Exchange Commission (SEC). Therefore, investors must verify this registration before purchasing securities from a firm or advisor. Below is an overview of how investors can avoid unregistered securities.
Review The PAUSE List
The SEC maintains a document called the Public Alert Unregistered Soliciting Entities (PAUSE) list. This list includes the names of entities that are the subject of investor claims. When an entity is included on this list, the SEC has verified that it isn’t registered to sell securities in the U.S.
Also, the SEC maintains a list of entities that investors have reported for allegedly impersonating registered securities agents or falsely claiming affiliations with government agencies or international organizations.
Conduct A Background Check
As an investor, the most important thing you can do is conduct a background check on any firm or person attempting to sell you an investment. There are multiple methods available for checking the backgrounds of brokers, firms, and investment professionals, including a service operated by the Financial Industry Regulatory Authority (FINRA), called BrokerCheck. Conducting a background check before investing will uncover important information, including details regarding customer complaints, civil or criminal proceedings, bankruptcy filings, and regulatory actions. And even if the firm or person you investigate is registered with the SEC, a background check can uncover additional useful information, such as:
Previous disciplinary action
Previous employment with any firms that were kicked out of the securities industry
Lawsuits or arbitration claims filed by customers
Also, when conducting a background check, it is important to do a thorough search. For example, some financial professionals may take measures intended to make it difficult for investors to locate them, including using alternate spellings of their names to hide past indiscretions. One of the best ways to ensure that a background check is thorough is to hire an investor representation attorney for assistance.
Have You Lost Money Due To Investment Fraud?
If you have lost money due to investment fraud, you need an experienced attorney on your side. At SIMMS Law, P.A., one of our primary focuses is the representation of investors who’ve been the victims of financial fraud by brokers, financial advisors, and other financial professionals. At SIMMS Law, we take your concerns seriously, and we will fight for you. Therefore, if you suspect that any suspicious activity has occurred in any of your investment accounts, or if you believe that you have been misled about the nature and risks of any of your investments, please contact our Florida investor representation attorney today for a free consultation.